THE CHIPS WERE DOWN, AND WILLIS STEIN STEPPED UP

It's hard for a family business to struggle against big corporations. It's even harder when most of the family leadership suddenly dies. For Chicago-based snack maker Jays Foods, this worst-case scenario ended in federal bankruptcy protection and a simultaneous bail-out by local middle-market specialist Willis Stein & Partners.

It's hard for a family business to struggle against big corporations. It's even harder when most of the family leadership suddenly dies. For Chicago-based snack maker Jays Foods, this worst-case scenario ended in federal bankruptcy protection and a simultaneous bail-out by local middle-market specialist Willis Stein & Partners.

After a family-led buyback from US food and chemical company Borden in 1994, Jays had a difficult time pulling itself out of the fryer. Though the company managed to increase sales and revenues, its crushing debt left it in danger of going stale. The situation deteriorated further following a string of family deaths in less than a year: Leonard Japp, Jr., Jays' majority owner, died in October 1999, followed by his son, Jays' chief executive officer Leonard Japp III, in April 2000, followed by the death of company founder Japp, Sr., four months later aged 96. Steve Japp, previously Jays' chief operating officer reporting to his older brother, became CEO.

The latest change at Jays is one of many colorful chapters in the company's history. Japp, Sr., founded the potato chip maker in 1927 as Mrs. Japp's Potato Chips and got his break during the US Prohibition when famed Chicago gangster Al Capone asked him to serve his potato chips in local speakeasies. After the bombing of Pearl Harbor by the Japanese in 1941, public sentiment forced the family-owned business to rename itself Jays. In 1986, the family sold the company to US food and chemical company Borden because it was unable to compete effective against rival Frito-Lay, now a division of PepsiCo. Borden failed to follow through on its plan to boost the Jays brand and offered the business back to the Japp family, who obliged and gave it another go.

Willis Stein managing partner Avy Stein says the private equity investment is not an operational turnaround. Rather, his firm is looking to provide Jays with more equity to grow and fix its balance sheet. He says the company has a solid product line and did more than $100 million in sales last year. Jays' flagship product is Jays Potato Chips, which are distributed throughout the Midwest under the slogan ‘Can't stop eating ’em.'

Stein says his firm will keep the Jays Chicago-based plant open and continue to grow the business under a new management team led by Tim Healy, a food industry veteran who led the successful turnaround of Select Beverages soft drink bottler and has held senior executive positions at major US food companies General Foods, HJ Heinz and Frito Lay. Market analysts say higher-end products are necessary for the storied company to compete effectively in the current snack foods market, but whether Jays can change its chips-and-beer image to one of refined munching remains to be seen.

ORCA BAY BUYS DREXEL SUCCESSOR
The Seattle private equity firm will acquire 1838 Investment Advisors from publicly traded MBIA. 1838, with $3.6 billion in large cap, fixed-income and international assets under management, was originally called Drexel and Company and is among the oldest firms on Wall Street. 1838 also specialises in tax management. The business will be run by Richard Hughes, an Orca Bay operating partner and former President of Rittenhouse Financial Services and Nuveen Asset Management. Orca Bay is led by John McCaw, founder of the McCaw cellular and cable empire.

FENWAY IS LORD OF CLASS RINGS II
The New York middle-market firm has acquired American Achievement, a provider of class rings, yearbooks and other ‘graduation products.’ The company had been owned by New York buyout firm Castle Harlan. Terms of the deal were not disclosed. American Achievement, based in Texas, has annual revenue of roughly $300 million and a network of roughly 400 ‘on-campus sales representatives.’